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China Looks to Energy Independence
2007-09-18 00:00

   The high-pitched tone of the China Central Television news announcer was all too familiar to Chinese aged 40 or over. Many important events in their lives were broadcast in the same manner.


   But this was May 2007, and the news wasn't a significant change in the country's political leadership. It was the discovery of the Nanpu Oil Field, and it was being hailed as one of the most exciting finds in the history of China's oil industry.


   The excitement had a reason – the discovery was symbolic evidence of and actual support for the government's strategy of becoming self-reliant in energy.


   The Nanpu Oil Field, with oil and gas reserves estimated at 1.18 billion tons, is located in a coastal area of the northern China city of Tangshan, which was devastated by an earthquake in 1976 that claimed 242,000 lives.


   A subsidiary of China National Petroleum Corporation started exploration in the area in 1988. Little progress was made in the initial years, but a breakthrough came in September 2004 and experts say they are confident that 1,800 to 2,800 meters underground lies more than 900 million tons of petroleum and 140.1 billion square meters of natural gas, more than 111 million tons of oil equivalent.



(The 18,200 MW Three Gorges Hydropower Station is scheduled for full operation in 2009.)


    Nanpu has undoubtedly boosted the confidence of decision-makers in the domestic supply. Yet it cannot relieve the worry over long-term energy security, as the overall picture of the country's energy reserves is basically unchanged.


   At the current speed of extraction, analysts say, the proven reserves of petroleum could last little more than 15 years, gas 30 year and coal 80 years.


   Statistics show China imported 43 percent of the oil it consumed in 2005. By 2020, demand could climb to 450 million tons, of which 250 million tons would have to be imported.


   To address the issue, conservation was deemed a priority. The Chinese government has set a target for 2010 of cutting the energy consumption per unit of GDP by 20 percent against the 2005 level.


   Apart from tightening management and optimizing the industrial structure, this is to be done largely through technological renovations in production and utilization. Outdated technology is the major cause of the country's low energy efficiency, which is about 10 percentage points below the world's most advanced level. The energy intensity of highly energy-consuming products, such as steel and cement, was often 40 percent higher than the world's leading producers.


   The power sector itself is a lavish energy consumer. To avoid loss of energy in the process of production, 1,000 MW of supercritical, extra-supercritical coal-fueled generators and nuclear power units are replacing small units to become the main production force of the industry.


   Long distance transmission, a necessary operation due to the uneven distribution of resources, is applying ultra high voltage technology. Projects are underway for two demonstration UHV power lines totaling 2,088 kilometers.


   For the same reason, the government has banned the extraction of petroleum if accompanying combustible gas is let loose and not collected.


   With the swift growth of China's economy, demand for energy has inevitably risen too. Conservation may help slow down,but not stop,the climb of the latter.


   According to Zhao Xiaoping, director of the energy bureau of the National Development and Reform Commission (NDRC), the country's highest economic planning department, the government is aiming to curtail primary energy consumption to within 2.7 billion tons of coal equivalent (CE) in 2010.


   Given the economic situation and the self-reliance policy, conservation in the sense of preserving reserves for future use is not an option. Digging and extraction have to be accelerated to meet the surging demand.


   China's energy consumption totaled 2.46 billion CE tons in 2006, the second highest in the world. It was also the world's second largest energy producer, producing 2.21 billion CE tons the same year. This breaks down into 2.38 billion tons of coal, 184 million tons of crude oil, and 58.55 billion cubic meters of natural gas.


   Coal has dominated the energy portfolio and China is the world's biggest coal extractor. In the last two decades, the proportion of coal in total energy consumption dropped from 76 percent to 68 percent. The share is expected to fall further, chiefly because of environmental concerns. But output is not likely to decline in the coming years.


   Neither is oil and gas production likely to slow. China's oil production ranked the fifth in the world. The country is constructing four oil contingency reserves for times of short supply. On completion in 2008 the facilities will be able to meet the nation's oil needs for at least 10 days.


   China is also actively promoting nuclear power. At present, nine units totaling 6,990 MW of generating capacity are in commercial operation. The target is to build 30 units with 40,000 MW of generating capacity by the year 2020, when the ratio of nuclear energy in total power capacity would climb to 4 percent.


   Since the 1990s, domestic supply has satisfied more than 90 percent of China's energy demands. Boosting production at home is possible with modern technology, capital and the reserves of coal, oil and gas. But the solution is short-term and the impact of conservation would be limited. The sustainability of energy security and the self-reliance policy would be in jeopardy without other measures.


   The answer lies in alternative or renewable energies. China's tapping of hydropower started early and other forms of renewable energy are gaining attention. By the end of last year, the country had installed 129,000 MW of hydropower capacity, more than any other country in the world.


   In addition, China was home to 80 million square meters of solar heating facilities, accounting for almost a half of the world's total. And turbines installed in the country's 91 wind farms have a combined capacity of 2,600 MW.


   The total capacity of all renewable power was 622,000 MW last year.


   According to the State Renewable Energy Medium- and Long-Term Development Program, China hopes to raise the proportion of renewable resources in total production from the current 7 percent to 16 percent by 2020. Specific targets for major renewable energies are: hydropower 290,000 MW; biofuels 20,000 MW; wind 30,000 MW; and solar 2,000 MW.


   China is home to the world's largest stock of hydropower resources, two thirds of which remains unexploited. The exploitation of wind and solar energy has just started.


   The potential of renewable energies is huge, says Ma Kai, minister in charge of the NDRC, and alternatives such as ethanol, coal-based alcohol ether fuel, and coal liquefaction products are promising.


   In the meantime, the government is looking at other energy possibilities, including "flammable ice" or frozen gas hydrates. And the country is on the seven-party International Thermonuclear Experimental Reactor (ITER) program, which hopes to achieve breakthrough in exploiting nuclear energy through atomic fusion.


   Conservation and clean alternatives have a positive impact on the environment, another aim of China's energy strategy. As a developing country, China had insisted that it should not be obliged by a quantitative quota to cut down on polluting emissions. But the government is taking actions to this end, if only for the sake of its own environment and its international image.


   The government has set a target of reducing carbon dioxide emissions by 10 percent in five years starting from 2006, while controlling emissions of greenhouse gases. In early June, it announced an unprecedented National Climate Change Program.


   The power industry was blamed for 54 percent of China's sulfur dioxide emissions. If the clean energy targets for 2010 were met, the program document said, the emission of 950 million tons of carbon dioxide (CO2) equivalent could be avoided.


   Ma Kai said the government would consider the uniqueness of its resources and responsibility in maintaining the stability of the international energy market. It would stick to the basic strategy of self-reliance by accelerating the development of the energy industry and boosting capacity.


   However, "self-reliance" also encompasses international cooperation. In the past year, China has participated in high-level international dialogues on energy issues. Frequent international communications allow the sharing of information, experience and technology, the exchange of personnel, joint investment and operation, and the trading of resources and products.


   Besides importing more oil and gas, China shipped in markedly more coal in the first half of this year. In December last year, a company dedicated to procuring uranium abroad was inaugurated in Beijing. Imports helped meet the energy demand at home, and were occasionally more cost-effective than domestic products, an industry observer said.


   From 1978 to 2005, China's primary energy consumption rose by 5.16 percent on average each year, while GDP grew by 9.6 percent. The energy sector had supported an economy that ran almost twice as fast as it did.


   However, almost the entire nation except the capital, Beijing, failed to meet the target for reducing energy intensity last year. This makes it a more daunting task ahead.


   "The targets can't be revised and we must work resolutely to reach them," Premier Wen Jiabao said in his Report on the Work of the Government, which was delivered in early March at the annual session of the National People's Congress, the top legislature of the country.


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